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Chinese Bitcoin Miners Feel Regulatory Heat

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Reports continue to emerge that suggest China will place a squeeze on bitcoin miners as part of its wider crackdown on cryptocurrency trading.

As sister-site CCN has reported, Chinese regulators have steadily closed the net around the country’s cryptocurrency ecosystem. The saga began when the People’s Bank of China (PBoC) ruled that initial coin offerings (ICOs) were illegal. Within a week, bitcoin exchanges began to announce their “voluntary” closures, citing the ICO ruling. Exchange shareholders and executives have allegedly been warned not to leave the country while investigators “clean-up” the now-illegal crypto marketplace. Finally, reports surfaced indicating that Beijing officials have told peer-to-peer cryptocurrency trading platforms to shut down their services.

With its foot now firmly planted on the neck of China’s bitcoin trading infrastructure, rumors have begun to emerge that indicate regulators will move against the Chinese cryptocurrency mining industry, which accounts for about 65% of the total bitcoin network hashrate.

To wit, Spencer Bogart, head of research at Blockchain Capital, tweeted  that his contacts have told him that “we haven’t seen the worst yet.” He suggested that “the most conservative outcome” would be a blanket ban on peer-to-peer trading, which would still indirectly kill the Chinese mining industry since companies would not have an outlet to trade their BTC for fiat currency. If the government takes a more aggressive stance, however, he warned that China could seize mining facilities and equipment. He also conveyed rumors that some bitcoin exchange executives could face “extreme punishment” for investing customer funds without their consent.

Bogart was careful to state that these reports are unconfirmed, but similar rumors have come from other sources, including the Wall Street Journal. Even more worrisome are comments from miners themselves. Wang Hongyi, an entrepreneur who is in the process of setting up a $1.5 million mining farm in China’s Gansu province, told the South China Morning Post (SCMP) he is concerned about being left without the ability to recover his investment if the ban does materialize:

If we start this business and the government says it’s illegal, then it will be impossible for us to recover our investment

ViaBTC Haipo Yang echoed those worries, telling the SCMP that he is “really concerned about administrative measures that the government might take to shut down mining.”

Fearing the coming storm, LedgerX developer Bryan Bishop warned Yang and his fellow bitcoin miners last week to “make immediate evacuation plans. Hire semi-trucks, load up the equipment, get out right now.”

Unfortunately, if the rumors are true, it might now be too late.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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I am a full-time high school history teacher, but I moonlight as a lifestyle tech geek. I am particularly interested in privacy-based techs.




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Altcoins

Cryptocurrency Market Update: Correction Deepens as Coin Values Approach 2018 Lows

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The cryptocurrency market approached its lowest level of the year Saturday in a continuation of yesterday’s flash crash that wiped more than $30 billion off coin values.

Market Update

Cryptocurrencies saw their combined market capitalization plunge to a low of $250.6 billion late Friday, according to CoinMarketCap. With the decline, coin values came within $2 billion of their bear-market low for the year.

At the time of writing, the total market cap was $255.9 billion on trade volumes of nearly $14 billion.

It became apparent early Saturday that bitcoin and Ethereum had found support near their Friday swing lows. Both coins are down less than 1% compared to 24 hours earlier.

Bitcoin touched a new yearly low of $5,938 on Saturday but has since consolidated above $6,100 on major exchanges. The largest cryptocurrency by market cap suffered a major reversal on Friday after failing to breach the all-important $6,800 threshold. The coin quickly broke down below $6,500 and has since tested multiple new lows. In terms of immediate support, BTC/USD is now eyeing $5,850.

Ethereum prices bottomed at $450.34 on Saturday, their lowest since mid-April. Ether values were last seen hovering around $470.

Elsewhere in the top-ten, EOS was down another 5% compared to yesterday and was last seen trading at $8.33. The EOS network is battling through a PR nightmare amid multiple delays and controversies.

Bottoming Process Continues

There doesn’t appear to be an immediate catalyst for the latest selloff. As Hacked reported earlier, attributing the declines to the Bithumb hack is misguided given that the market quickly recovered from the negative headlines. (The initial decline was also limited.) Bithumb has already announced plans to compensate users affected by the $30 million heist. The exchange also disclosed that the theft accounted for no more than 6% of its proven reserves.

Cryptocurrencies remain trapped in a long-term bearish cycle that emerged early this year after markets reached their highest level on record. According to Bill Baruch, President of Blue Line Futures, the six-month correction represents a bottoming process that has yet to conclude.

In a recent interview with CNBC, Baruch said that repeated selloffs over the past four months have “wiped out most, if not all, of the over-enthusiasm” and FOMO speculators from the market. While initially bad from the perspective of prices, this means speculative positions are declining. Hacked first noted the decline in speculative positions more than three months ago following the April Fool’s Day selloff.

Analysts have noted that the recent six-month correction mirrors bitcoin’s 2014 retreat, which highlights the boom-and-bust nature of the digital asset class. Against this backdrop, bitcoin and its altcoin counterparts likely need to demonstrate several months of consolidation and stability before the bull market re-emerges.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 464 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Bitcoin

CNBC Holds Funeral For Bitcoin

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CNBC show “Fast Money” held a supposed funeral for Bitcoin on their show this evening. The tongue-in-cheek ceremony occurred due to the hosts citing the BitThumb hack and today’s corresponding big drop in crypto asset prices across the board.

This is not the first time CNBC, or “Fast Money” in particular has made controversial statements about the original cryptocurrency Bitcoin.

Brian Kelly, for instance, has previously compared cryptocurrency to the “Internet in the 1980s,” emphasizing that Bitcoin is still in its early stages in an April 13 interview on CNBC’s Trading Block.

Also in April, Kelly mentioned a report by analysts at Barclays which referred to cryptocurrency as a “virus” and an infectious disease that would never hit another high again.

In tonight’s episode of “Fast Money”, Kelly noted that the moment right after negative articles are published is exactly when he “wants to buy any asset, whether it’s Bitcoin or not.” Kelly also stated recently that he supports Tim Draper’s assessment that Bitcoin could hit $250,000 by 2022.

So the “funeral” is really a mockery of Bitcoin critics who have a tendency to proclaim the death of Bitcoin every time a negative story hits the press.

The best example of this was obviously when Jamie Dimon of Chase Bank called Bitcoin, “a fraud.” When prices subsequently dropped, Chase was one of the largest buyers of Bitcoin.

During tonight’s “funeral”, Kelly gave four main reasons for why he’s bullish on Bitcoin.

1. Bitcoin is approaching historic lows in terms of both sentiment and prices for the year 2018.
2. He views a recent Japanese government statement ordering exchanges too, “improve business conditions”, while rough in the short term due to a temporary freezing on the creation of new accounts, will actually contribute to a more vibrant market in the long term.

He further clarified that this action by the Japanese government was tantamount to, “cleaning up the system.”

3. Mt. Gox announced that they are going to distribute the rest of the over 1 million in Bitcoin they still have to victims of the 2014 hack. Notably, however, this would not occur until Q1 of 2019 at the earliest. This in Kelly’s view creates a sleeping bull market event waiting to happen.

4. There are not enough Bitcoin futures trades shorting Bitcoin to affect the price negatively in a significant way.

Kelly concluded the segment by making the argument that Bitcoin is due to have a huge price spike. He elaborated on this by noting the similarity in trading charts to a previous spike a couple years ago.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Altcoins

Selloff Resumes: Cryptocurrency Market Heads for Weekly Loss After Friday Tumult

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Cryptocurrency prices fell hard on Friday, with EOS hitting its lowest level in 60 days as bear-market pressures re-emerged following days of stable trading ranges.

Coins See Red

Cryptocurrency prices were down across the board, with major altcoins like EOS and Ethereum falling double digits percentage-wise. EOS reached a session low of $9.30, its worst reading in two months, following a botched mainnet launch that has yet to be resolved.

Ethereum prices are down more than 10% at $477. Ether bottomed around $468 earlier.

Bitcoin is currently testing four-month lows after being rejected several times at $6,800, a key inflection point for the digital currency. As Hacked reported Thursday, bitcoin’s rejection at that level was a strong sign that the recovery was losing steam. BTC/USD reached a low of around 6,092.38 on Friday, according to CoinMarketCap.

Bitcoin was last down more than 7% at 6,210.

Nearly every coin ranked in the top-100 by market cap was down compared with 24 hours ago, with the only exception being Game.com, a lesser-known altcoin.

The cryptocurrency market cap plunged by more than $30 billion to $257 billion. It had spent most of the week above $285 billion. Total trade volumes have averaged $14.1 billion over the last 24 hours.

Bearish Cycle Continues

While there was no immediate catalyst for the Friday selloff, the pullback is likely a continuation of the bearish cycle that re-emerged last month. The market has formed a new bottom in the wake of last week’s $60 billion selloff, a sign that bearish pressure is likely to remain.

Contrary to some reports, the recent cyber attack on Bithumb is not the cause of the recent price shakeup. Although the market dipped initially following reports of the breach, it recovered just as quickly and continued higher.

That said, the attack did catch the attention of financial watchdogs across the Asia Pacific region. On Friday, Japan’s financial regulator
ordered several digital currency exchanges to improve their anti-money laundering practices.

The order from Japan’s Financial Services Agency (FSA) led bitFlyer, the country’s largest crypto exchange, to suspend the creation of new accounts as it beefed up its standards.

South Korea’s financial regulators have also stated they will expedite the creation of new cryptocurrency laws following the recent attack. According to various reports, new legislation could be on its way in a matter of months.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 464 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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